In evaluating an entity's accounting estimates, one of an auditor's objectives is to determine whether the estimates are:

Question

Quizplus · Accepted Answer

Choice "D" is correct. In evaluating an entity's accounting estimates, one of an auditor's objectives is to determine whether the estimates are reasonable in the circumstances and in conformity with GAAP. Choice "A" is incorrect. Most estimates are subjective in nature and thus subject to bias. Choice "B" is incorrect. Industry guidelines generally do not determine the amount of an accounting estimate, which is developed in accordance with GAAP. Choice "C" is incorrect. Estimates are generally not based upon objective assumptions; rather, they are uncertain in nature, pending the outcome of future events.

In Evaluating an Entity's Accounting Estimates, One of an Auditor's